TechUK – Written Evidence (AUT0027)
techUK is a membership organisation launched in 2013 to champion the technology sector and prepare and empower the UK for what comes next, delivering a better future for people, society, the economy, and the planet.
It is the UK’s leading technology membership organisation, with more than 850 members spread across the UK. We are a network that enables our members to learn from each other and grow in a way which contributes to the country both socially and economically.
By working collaboratively with Government and others, we provide expert guidance and insight for our members and stakeholders about how to prepare for the future, anticipate change and realise the positive potential of technology in a fast-moving world.
techUK welcomes the opportunity to respond to the consultation on future trade negotiations with Australia. techUK is supportive of a future FTA with Australia that includes deep and comprehensive provisions for digital trade and sets a high benchmark for the UK’s future trade policy.
In 2019, the stock of UK FDI in Australia was £37.3 billion accounting for 2.5% of the total UK outward FDI stock, while Australia invested £14.4 billion in the UK accounting for 0.9% of the total UK inward FDI stock. In the four quarters to the end of Q3 2020, Australia was the UK’s 13th largest services trading partner (accounting for 1.8% of UK services trade).[1] It will be important in any discussion of an FTA to recognise these existing links and build on them.
The rapid rise of technology and digitisation is transforming global economies and opening up new opportunities for businesses and consumers. The COVID-19 pandemic starkly demonstrated the centrality of digital technologies to our social lives and our businesses. Digital trade is also playing a key role in the economic recovery from COVID-19. The Australia-UK FTA has the potential to strengthen UK-Australia trade and investment relationship for the benefit of businesses and consumers in both countries. It will also provide an important signal of UK’s commitment to global trade liberalisation, and will play an important role in the country’s post-COVID economic recovery.
Both countries share strong ambitions in digital trade. In August 2020, Australia concluded a progressive Digital Economy Agreement (DEA) with Singapore, setting gold standard rules in digital trade policy. The DEA between Australia and Singapore breaks new ground in cooperation on emerging technology areas such as AI, digital identities, data innovation, the interoperability of regulatory systems and online safety environment. The agreement goes further than any other comparable bilateral digital chapter and is more comprehensive than digital commitments made in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Australia is a member. The CPTPP is a deep agreement that already sets a high bar for trade agreements, but there are nevertheless areas where a separate agreement with Australia could go further. If there are opportunities for the UK and Australia agreement to go further than CPTPP in certain areas, these areas should be explored and, if possible, agreed upon. The CPTPP provisions should be seen as a minimum of what can be achieved with Australia bilaterally.
After leaving the European Union, the UK is in a unique position to help establish global rules in the vitally important sphere of digital trade. Early UK trade deals since leaving the European Union, in particular the UK-Japan Comprehensive Economic Partnership Agreement (CEPA) and UK-EU Trade and Cooperation Agreement (TCA), have recognized this importance and established that the UK is serious about an ambitious digital trade policy.
Since Australia has been an important pioneer of including digital provisions within trade agreements, there is an opportunity to set a high bar in a future UK-Australia FTA. The UK should build on and go beyond the digital rules established in the UK-Japan CEPA and UK-EU TCA to maintain its position as an important data hub.
techUK welcomes the Government’s ambition to “future proof” all FTAs with digital provisions in order to take advantage of the benefits of the Fourth Industrial Revolution and increased digitalisation.
3.1. Cross-border flow of data without compromising data protection standards
techUK believes any future FTA should include provisions enabling the free flow of data. The definitions of data should include financial data, which should not be treated differently to other categories of data. Cross-border data flows increasingly underpin all sectors of the economy, and with the volume of data flows expected to continue to grow rapidly, it is important that an FTA ensures the ability to transfer data to and from Australia without compromising data protection standards. Future UK trade agreements should ensure that all parties are encouraged to adopt or maintain a legal framework providing for the protection of personal information. These commitments provide business the assurances they need that they can collect, process, and transfer data between the two countries, without facing unnecessary red tape while maintaining commitment to the UK’s Data Protection Act 2018. The free flow of data is essential in many industries and sectors to run operations smoothly.
The UK should ensure that any commitment it makes in future trade agreements does not jeopardise the recently announced EU Adequacy decision. 75% of the UK’s cross-border data flows are with EU countries and preventing any barriers to future UK-EU data flows should be the UK’s priority.[2]
3.2. Data localisation
techUK believes that a future FTA with Australia should include a reciprocal commitment that ensures that no party shall require the use of computing facilities or their location in a Party’s territory as a condition of market access. Data localisation requirements represent an unnecessary barrier to trade that increases the cost of storing data for businesses.
3.3. Digital Tariffs and Non-discrimination of what is provided in Digital Format
techUK encourages the UK government to include a strong commitment in a future UK-Australia trade deal to ban the imposition of customs duties in connection with the import or export of what is provided in a digital form, i.e. transmitted electronically. This commitment should extend to all digital products regardless of source rather than being limited to just the signatories of the agreement, thus helping embed the moratorium in international law.
A future UK-Australia FTA should seek to prevent the mandatory transfer of source codes so that businesses will not be forced to disclose or transfer their product source code as a condition for market access. The UK government should explore the possibility of including a clause stating that no party shall require the transfer of, or access to, source code of software, algorithms, or encryption keys owned by a person of another party, as a condition for the import, distribution, sale or use of such software, or products containing such software, in its territory. Such a provision would not prevent the provision of source code in commercially negotiated contracts, nor would it prevent requiring the modification of software to comply with a party’s laws and regulations.
Likewise, the UK should work with Australia and other like-minded countries to ensure the Joint Statement Initiative (JSI) e-commerce negotiations include robust provisions to prevent the mandatory transfer of source codes, algorithms, or encryption keys as a condition of market access. It is important that the UK’s digital trade policy is used to protect the IP of innovative UK firms.
3.5. Open government data
A UK-Australia FTA would provide an opportunity to build on the gold standard set by the USMCA that commit parties to make government data available to the public in machine-readable and searchable open formats, and allow it to be searched, retrieved, used, reused, and redistributed for the purpose of economic, social and research benefit. This would help facilitate AI technology development, scale the UK’s AI sector and export its innovations. The UK has already set a precedent of including this provision in the UK-Japan CEPA.
Similarly, Australia made commitments to improving the accessibility of publicly, anonymized government information in the DEA with Singapore. An additional step that the UK should take to break new ground on digital trade would be to include mutual commitments to facilitate the use of text and data mining in the training of AI programs and artificial neural networks by providing greater access to data. Such a commitment should also only apply to works and content that has not been expressly reserved by IP holders in the appropriate manner, such as by machine-readable means in the case of content made publicly available online.
3.6. Online safety
The Australia-Singapore DEA and Singapore-New Zealand-Chile DEPA have broken new ground by moving beyond online consumer protection and specifically addressing online harms in the context of a trade agreement. The UK should follow the best practice set in the DEA and DEPA, and include provisions in a future FTA with Australia that commit parties to working together and within international fora to advance online safety.
3.7. Cooperation on the regulation of AI, fintech and other emerging technologies
The reality of technological change today means that it will not be tariffs that are the main barrier to digital trade, but regulatory divergence. Across a vast range of areas, Governments are scrambling to understand the implications of new technologies and business models. From what cryptocurrency and fintech means to baking systems, to the ethical and legal implications of AI and autonomous vehicles, to the impact of social media on elections, the regulatory landscape for emerging technologies is going to get more complex very soon.
The UK government should aim to support the growth of emerging technology companies by establishing frameworks for cooperation in the development of regulation. Ensuring approaches are aligned in areas such as data ethics, AI and digital do a great deal to enable trade as these technologies develop. The UK should follow the example of the Digital Economy Agreement and include commitments to cooperate and maintain a dialogue on the promotion and development of mechanisms that facilitate the interoperability of regulatory regimes. The Singapore-Australia DEA provides a model for doing this with its accompanying MoUs. Given the fast-moving nature of technology and the regulatory challenges that can arise from it, these additional MoUs provide a flexible and adaptive framework to advance the interests of both Parties in cooperation with each other.
There is a great opportunity for the UK to work with Australia to strengthen cooperation in the identification and mitigation of cybersecurity threats and enable the sharing of information and best practices. Furthermore, the DEA sets a high bar for collaboration on FinTech and RegTech between regulators and policymakers that the UK should seek to replicate.
3.8. Trade facilitation
DEA includes new provisions to encourage cooperation and the sharing of best practices on logistics and electronic. The UK should ensure that its future trade agreements take a comprehensive approach to business and trade facilitation building on the DEA example. The UK should seek to use its digital trade policy to advance the recognition and adoption of paperless trading and e-signatures, helping reduce trade costs across global supply chains.
The GATS Annex calls telecommunications “the underlying transport means for other economic activities”[3]. Telecommunication services provide the backbone to the digital economy yet they are subject to some of the most protectionist requirements and anti-competitive policies[4]
techUK therefore supports sound and pro-competitive telecoms chapters in FTAs that mirror the standards we have in the UK to ensure a level-playing field between international markets. This includes best regulatory practice on non-discrimination in wholesale access to the “last-mile” and evidence-based regulatory interventions and equally for evidence-based regulatory forbearance. The recent TCA with the EU is the current benchmark.
The FTA with Australia offers an opportunity for two like-minded partners to move the global benchmark further for telecommunications services. This can help improve standards and market access to other third country markets to which the UK (and Australia) export communications services. Significant market entry barriers in telecoms exist in many markets including in the APAC region and even in a number of OECD countries. Further, it also indirectly helps the related discussions at WTO level where a reform of WTO telecoms rules is on the agenda of the eCommerce negotiations.
In sum, market access barriers in telecommunications are:
The latter is a persistent problem, even in advanced markets, making it very difficult to compete with dominant local operators.
A future UK-Australia trade agreement should match the EU-Japan CETA and EU-UK TCA when it comes to telecommunications services provisions and seek to liberalise telecommunications trade in a number of ways:
Given the telecommunications are an enabler of digital trade, techUK has no specific view on the question, whether telecommunications are addressed in a specific chapter on Telecommunications or in a sub-section of a Digital chapter.
3.9.1. Roaming
Finally, with regards to Roaming, techUK supports the approach taken in the UK FTA with Japan (CEPA) promoting transparency for consumers and reduction of prices through competition, innovation and new business models. We favour this approach for all the new FTAs over a market interventionist one.
One issue for techUK members is improving the speed, cost and number of visas for both UK staff into Australia and vice versa, and reducing the bureaucratic requirements associated with them. In a highly competitive and fastmoving sector, the ability to recruit talent easily and move them within a business is critical. Restrictions and bureaucratic requirements directly lead to increased costs and delays for businesses. In a competitive and fast-moving sector, the ability to recruit talent easily and move them within a business is critical and, as techUK has previously argued, there is much space to improve the UK’s immigration system.[5] Not having the ability to place the right people at the appropriate time in the jurisdictions in which they have interests could become a considerable disadvantage.
techUK recommends that a future FTA with Australia help facilitate easier short-term movement of people between the countries and supports longer term migration. techUK also believes provisions on the mutual recognition of qualifications, such as legal, medical, accounting and other financial qualifications, should be a central objective of any services chapter. As new technology transforms established professions, through areas like medtech, fintech and legaltech, ensuring that the qualifications of the specified person behind the technology is recognised will be crucial to enable the product to be used in Australia.
February 2021
[1] Trade and Investment Factsheet Australia, Department for International Trade, Trade and Investment Factsheet (publishing.service.gov.uk)
[2] “The UK Digital Sectors After Brexit: An independent report commissioned by techUK”, Frontier Economics, January 2017, https://www.techuk.org/insights/news/item/10086-the-uk-digital-sectors-after-brexit
[3] WTO | Services: Annex on Telecommunications
[4] Martina Francesca Ferracane et al., “Digital Trade Restrictiveness Index”, European Centre For International Political Economy, April 2018, https://ecipe.org/wp-content/uploads/2018/05/DTRI_FINAL.pdf
[5] “An Immigration System that Supports the UK Tech Sector”, techUK, September 2018, https://www.techuk.org/insights/reports/item/13919-an-immigration-system-that-supports-the-uk-tech-sector